Trump’s Health Plan Would Convert Medicaid to Block Grants, Aide Says

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Demonstrators this month outside the Trump International Hotel and Tower in New York. They were protesting plans to repeal and replace the Affordable Care Act.CreditCreditDemetrius Freeman for The New York Times

WASHINGTON — President Trump’s plan to replace the Affordable Care Act will propose giving each state a fixed amount of federal money in the form of a block grant to provide health care to low-income people on Medicaid, a top adviser to Mr. Trump said in an interview broadcast on Sunday.

The adviser, Kellyanne Conway, who is Mr. Trump’s White House counselor, said that converting Medicaid to a block grant would ensure that “those who are closest to the people in need will be administering” the program.

A block grant would be a radical change. Since its creation in 1965, Medicaid has been an open-ended entitlement. If more people become eligible because of a recession, or if costs go up because of the use of expensive new medicines, states receive more federal money.

If Congress decides to create block grants for Medicaid, lawmakers will face thorny questions with huge political and financial implications: How much money will each state receive? How will the initial allotments be adjusted — for population changes, for general inflation, for increases in medical prices, for the discovery of new drugs and treatments? Will the federal government require states to cover certain populations and services? Will states receive extra money if they have not expanded Medicaid eligibility under the Affordable Care Act, but decide to do so in the future?

Ms. Conway, speaking on the NBC program “Sunday Today,” said that with a block grant, “you really cut out the fraud, waste and abuse, and you get the help directly” to intended beneficiaries.

Medicaid covers more than 70 million people at a combined cost of more than $500 billion a year to the federal government and the states. More than 20 million people have gained coverage under the Affordable Care Act, more than half of them through Medicaid.

The new Congress has approved a budget that clears the way for speedy action to repeal the health care law, President Barack Obama’s signature domestic achievement. And Mr. Trump has said Congress should take action to repeal and replace the law at the same time, putting pressure on lawmakers to agree on an alternative.

As a candidate, Mr. Trump said he wanted to “maximize flexibility for states” so they could “design innovative Medicaid programs that will better serve their low-income citizens.” On Friday, in his first executive order, he directed federal officials to use all their authority to “provide greater flexibility to states” on the health law.

As part of their “Better Way” agenda, House Republicans said in June that they would roll back the Affordable Care Act’s expansion of Medicaid and give each state a set amount of money for each beneficiary or a lump sum of federal money for all of a state’s Medicaid program — “a choice of either a per capita allotment or a block grant.”

Governors like the idea of having more control over Medicaid, but fear that block grants may be used as a vehicle for federal budget cuts.

“We are very concerned that a shift to block grants or per capita caps for Medicaid would remove flexibility from states as the result of reduced federal funding,” Gov. Charlie Baker of Massachusetts, a Republican, said this month in a letter to congressional leaders. “States would most likely make decisions based mainly on fiscal reasons rather than the health care needs of vulnerable populations.”

Gov. Robert Bentley of Alabama, a Republican, said that if a block grant reduced federal funds for the program, “states should be given the ability to reduce Medicaid benefits or enrollment, to impose premiums” or other cost-sharing requirements on beneficiaries, and to reduce Medicaid spending in other ways.

In Louisiana, Gov. John Bel Edwards, a Democrat, said he was troubled by the prospect of a block grant with deep cuts in federal funds. “Under such a scenario,” he said, “flexibility would really mean flexibility to cut critical services for our most vulnerable populations, including poor children, people with disabilities and seniors in need of nursing home and home-based care.”

Gov. John W. Hickenlooper of Colorado, a Democrat, said that block grant proposals could shift costs to states and “force us to make impossible choices in our Medicaid program.”

“We should not be forced to choose between providing hard-working older Coloradans with blood pressure medication or children with their insulin,” Mr. Hickenlooper said.

A version of this article appears in print on , on Page A17 of the New York edition with the headline: Replacement for Health Law Would Convert Medicaid to Block Grants, Trump Aide Says. Order Reprints | Today’s Paper | Subscribe